Blackstone Mortgage Trust, Inc. Q1 FY2025 earnings call

• Key drivers: portfolio turnover through repayments and redeployment, resolution of impaired loans, and balance sheet optimization.
• Macro outlook: Real estate well-positioned to outperform, capital markets functioning with broadly available capital, though spreads widened marginally, cost of capital still ~40% lower than peak.
• Portfolio turnover: $1.8 billion repayments and $1.6 billion new investments in Q1, with $2 billion closed or in closing in Q2; 90% of 2025 activity backed by multifamily, industrial, etc., with attractive levered returns.
• Balance sheet: Issued a $1 billion CLO with a 30-month reinvestment feature, debt-to-equity ratio at 3.4 times (lowest in three years), and $1.6 billion liquidity.

In the first quarter, Blackstone Mortgage Trust (BXMT) reported a GAAP net loss of effectively $0.00 and distributable earnings of $0.17 per share. Distributable earnings prior to charge-offs were $0.42 per share. A dividend of $0.47 per share was paid for the first quarter. The portfolio was 95% performing, up from 88% at the trough. US office exposure decreased to 21% from nearly 40% previously. The REO assets stood at 3% of the portfolio and generated $7 million of distributable earnings in Q1. Impaired loans were $970 million, or 5% of the portfolio, and the CECL Reserve ended at $754 million, or 3.9% of the portfolio.

• Expect timing headwinds in Q1 to shift to tailwinds in Q2 with $2 billion loans closed.
• Anticipate positive impacts on earnings from impaired loan resolutions as capital is redeployed into new investments at target returns.
• Confidence in navigating market volatility and capitalizing on attractive investment opportunities across real estate credit markets globally.

• Tariff policy uncertainty could weigh on the broader market over time.
• Macro volatility may slow repayment sums.
• Potential challenges with the timing of repayments and redeployment of capital.

Q: Rick Shane asked about 4-rated loans, their value, and transition path.

A: Katie Keenan said 4-rated office loans were around $500 million, down from a year ago, with focus on modifications and some moving to post-modification category.

Q: Tom Catherwood asked about loan book growth and origination pipeline shift post tariffs.

A: Katie Keenan said they're looking to grow towards $20 billion, and Austin Peña noted origination pipeline remains consistent in resilient sectors like multifamily.

Q: Jade Rahmani asked about repo market trends and real estate sectors.

A: Katie Keenan said strong relationships with lenders, real estate sectors like hospitality watched, multifamily resilient, industrial stable.

Q: Harsh Hemnani asked about borrower types and loan spread changes.

A: Austin Peña said investment profile shifted to less transitional, shorter duration, and spreads widened slightly, but platform has options for financing.

Q: Chris Muller asked about CLO market and impaired loan resolutions.

A: Katie Keenan said CLO market will settle, and they continue resolving impaired loans with positive trajectory.

Q: Doug Harter asked about general reserve increase and loan resolutions.

A: Anthony Marone said general reserve reflects long-term credit risk, and Katie Keenan discussed resolution pace and REO asset management